Saudi Arabia has hiked its crude oil prices for Asian buyers by $0.40 per barrel and cut those for European and U.S. buyers by $0.20 and $0.10 per barrel, respectively, Reuters has reported, noting the increase is for May cargos, from the prices for April cargos.
This means the May shipments price for Arab Light—Saudi Arabia’s flagship grade—will cost Asian buyers $1.80 above the Oman/Dubai average, which is used as basis for price-setting. The Oman benchmark was trading above $63 a barrel at the time of writing, and the Dubai contract was above $64 a barrel.
The news is unlikely to be welcome by the two biggest buyers of Saudi crude, China and India, especially by India, which has been vocal in its opposition to OPEC’s price-raising efforts.
The world’s third-largest consumer of oil has repeatedly called on the cartel to stop cutting production and let prices slide. Meanwhile, it has started looking for alternatives to Middle Eastern oil.
“We have asked companies to aggressively look for diversification. We cannot be held hostage to the arbitrary decision of Middle East producers. When they wanted to stabilize the market we stood by them,” a government source told Reuters in early March.
India imports as much as 80 percent of the crude oil it consumes. Of this, some 60 percent comes from Middle Eastern producers. According to unnamed sources cited by Reuters, India could diversify into more U.S. crude and crude from the world’s newest producer—Guyana.
Meanwhile, the government has asked refiners to review their contracts with Saudi Arabia and other Middle Eastern producers and use their collective bargaining power to get better terms, The Hindu reported this weekend.
China, in the meantime, is gobbling up cheap Iranian oil despite U.S. sanctions and may not need to continue buying at the rates it did last year, when crude was dirt cheap wherever it came from.
By Irina Slav for Oilprice.com
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